TheAgitator.com
Gasbags
Monday, May 31st, 2004As is often the case, when politicians start stumping on alleged crises like the high price of gas, many times it’s their own policies, not market failure, that lead to the crises in the first places (and even more often, there’s really not much of a crisis to begin with).
Did you know that in Maryland, for example, there’s a minimum-price law for gasoline? Did you know that this law forbids gas stations from giving away free coffee with a fill-up?
And in Minnesota, they fine gas stations for selling gas too cheaply.
Combine silly protectionist laws like these (which spread quite a bit farther than the borders of Minnesota and Maryland) with EPA regulations that require different regions of the country to compy with different gas formulas to meet emissions standards, and you have a government-inspired recipe for artificially high gas prices, wholly independent of price gougers or greedy oil companies.
Hat tip: Marginal Revolution.
Did you know that this law forbids gas stations from giving away free coffee with a fill-up?
Well, you have to save people from themselves, right? Next thing you know, a customer is going to spill it on him / herself and sue the gas station.
Oh, wait…
Interestingly, in New Jersey, it is against the law to offer self-service gas. You have to pay someone to fill up your tank for you. It dates back a few decades to when some idiot blew himself up by smoking a cigarette while pumping his gas. And yet, for some reason, New Jersey also has some of the lowest gas prices in the region.
I’m traveling this week, and what I find interesting is the comparison in pricing between gasoline and diesel.
In the areas I drive through (TX/OK/MO), gasoline has jumped up about 45 cents per gallon since I last made this trip in March … but diesel has only jumped up about 15 to 25 cents a gallon in the same time.
In fact, places that in March had no-lead and diesel at the same price, now have as much as a 30 cent difference between the two.
This corroborates Radley’s assertion that there is more going on here than the greed of sheiks and Texans … because if “crude” greed was the cause, both diesel and gas would rise together.
While I don’t have to deal with the state-based problems Radley mentions in the areas I drive through, I certainly have to deal with the effects of insufficient refinery capacity and reformulation … thanks to the watermelons who have blocked new refineries and demanded micromanagement of pollution control.
Yes gas is getting more expensive, but I can only shake my head when I hear over and over that people are having to choose gas or food. On average, gas is up say 50 cents. If you have a 15 gal tank, that is an increase of $7 per fill up. If you fill once a week, then an increase of $28/mo.
Looking at the price of groceries, I guess I should go without a case of beer to make up for the gas increase.
Yes it is a pain to pay more, but not unbearable as the “media” would have us believe.
If I wasn’t so friggin lazy, I’d link the TCS piece that ran last week about how gas prices are relatively low, corrected for inflation.
One of the other thing that occurs to me is that part of the price of gasoline is hidden from the consumer in the form of taxes paid to the federal government to ensure a steady supply of oil (anyone remember Desert Storm 1?)
Gas prices in perspective
Today’s Austin-American Statesman has a good, simple explanation of the current cost of gasoline. It adds up like this: - Oil Wellhead = 86 cents a gallon (for crude oil) - Transportation to refinery = 4 cents (for crude oil)
If I wasn’t so friggin lazy, I’d link the TCS piece that ran last week about how gas prices are relatively low, corrected for inflation.
Yeah, I think it was like, adjusted for inflation, given the gas prices around 1990, we should be paying closer to $2.75 national avg. But people don’t quite understand that if the value of money goes down, then the price of something should go up. The price of gas is something that people pay much more attention to than, say, the price of whole wheat bread or the price of Q-tips. It’s no crisis.
Back to Radley’s post. I read about that Maryland min-price law awhile back, just when the media was starting to make a big deal out of the gas “crisis”. And what it boils down to, is, there’s a big conglomeration of small-time gas station owners. Just like with Home Depot vs. hometown hardware, they can’t fight fire with fire. The Sheetz’s and other big chains were driving them out of business, because they were able to have such low prices. So, instead of lowering prices too, the owners got together and lobbied the government to set minimum price laws. This is basically the enemy of the free market. Communism by any other name is still….
It’s terrifying.
Another interesting factoid. Not long ago, maybe 2 or 3 months back, there were 3 senators blithely calling on the president to release the SPR in order to drive down gas prices. Obviously, they were living in a cave during our last gas “crisis”, when Clin-Ton released some of the SPR, and nothing happened. Granted, I don’t agree with the government keeping a stash of petro in the first place, and I think it should all be sold off and the money given back to us taxpayers, but it shouldn’t be simply dropped into the market because of a manufactured crisis.
Anyway, the stinger: those three senators came from three separate states, I think it was Nevada, California, and New York, maybe…and those three states happened to have the highest state gas taxes in the nation. Hmmmm…so, maybe, before these idiots start calling for others to drive down gas prices, they should engage in a little bit of self-reflection, and realize that they are as much of a problem as the fed is.
I’m no petro-chemist, but I don’t quite understand why we need 3 different octane ratings at the gas pump. I would guess the refining process is a little more expensive for regular-to-plus-to-premium…so why waste the time (and money) to make the premium grades? I realize most manufacturers recommend using the mid-grade gas in newer cars (89 to 91 octane), but my 2003 model car runs just fine on regular 87 octane.
Granted, this wouldn’t put much of a dent in the price problem, but it could simplify the refining process, as well as triple the availability if the oil companies would shift to a single octane output.
Dave,
Only high performance cars require high octane fuel. The majority of cars are designed to run on 87 octane. And, by the way, refineries don’t produce mid-grade. It is made at the gas station by mixing regular and high-test.
Amy - New Jersey’s full-service gas pumping law was also a bid to decrease unemployment. I don’t know if it had any appreciable effect, but anyway.